Listed real estate market outlook 2025

The year 2024 began with cautious expectations regarding economic development. Economic growth forecasts were low, and a recession was a realistic scenario in many analysts' predictions. Due to weak growth expectations and decreasing inflation, central banks were expected to begin cutting key interest rates in the first half of the year. However, global economic growth last year turned out to be stronger than expected, particularly due to favorable developments in the United States, and inflation proved stickier than anticipated. By mid-year, central banks had started reducing key interest rates. However, these cuts did not lead to a decrease in long-term market interest rates, and by December, the 5–10 year yield curves were generally higher than at the start of 2024.

The performance of listed real estate companies in 2024 was modest, except for the United States. In local currencies, the global listed real estate companies’ return remained slightly positive. The euro weakened against most target market currencies during 2024, improving returns for euro-denominated investors. The rise in long-term interest rates was the main factor behind the modest returns. For UB’s real estate equity funds, UB North America Real Estate Equity was the best-performing fund, with an almost 10% return. The U.S. allocation also lifted UB Global Real Estate Equity into positive returns. UB Asia Real Estate Equity remained almost unchanged throughout the year, but weak performance in December led to a negative full-year return for UB Europe Real Estate Equity.

The operational performance of listed real estate companies remained strong in 2024, and the near-term growth outlook for net rental income looks reasonable. Adjusting to the new interest rate environment is still partly ongoing. Some of the loans taken by real estate companies are from periods when interest rates were close to zero. As these loans mature and are refinanced, real estate companies should be prepared for higher interest expenses in the future. This adjustment process has been reflected in the cautious dividend payments. Once the loan portfolio is renewed and/or interest rates decline, growth in dividend flows paid by real estate companies is likely to resume.

Valuations of the Listed Real Estate Market are Attractive

Current valuation levels in the listed real estate market are relatively inexpensive from a historical perspective. The expected dividend yield is clearly above 4%, whereas this valuation metric has generally fluctuated between 3.5% and 4.5% over the past ten years. Additionally, dividends are expected to grow by nearly 5% annually over the next three years, which is also slightly above the historical average. Property values stabilized during 2024, and the largest write-downs in asset values are likely behind us. Currently, real estate companies' stock prices are, on average, below their fair book values.

e believe that listed real estate companies are well-positioned for the 2025 return outlook, and many companies have the capacity for property acquisitions and mergers, should attractive opportunities emerge in the market. The recent repricing of the interest rate market and the fear of a trade war following Trump's re-election have already been factored into the stock prices of real estate companies. The U.S. also has no interest in imposing significant import tariffs on all industries and trading partners, and as a result, a de-escalation of the strong rhetoric through negotiations is highly likely.

United Bankers' Real Estate Equity funds:

UB Asia Real Estate Equity Fund »

An Equity Fund investing in Real Estate Investment Trusts (REITs) in Asian and other Emerging Markets.

UB European Real Estate Equity Fund »

Liquid and well-diversified portfolio of European real estate securities.

UB Global Real Estate Equity Fund »

Suitable for a long-term investor who wants to invest in liquid and diversified real estate.

UB North America Real Estate Equity Fund »

Invest in the real estate market in the United States, Canada and Mexico.

All our funds »

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The information presented is based on UB’s own estimates and sources considered reliable by UB. The information on which the conclusions are based may change quickly and UB Group may revise its market view without prior notice. No information obtained through this presentation should be construed as a solicitation to invest. When making investment decisions, readers should base their decisions on their own assessment of the investment and the risks involved, and to consider their personal goals and financial situation.

Investing in funds always involves financial risk. The value of an investment in a fund may go up or down and you may lose some or all of the capital invested. The past performance of a fund is not a guarantee of future performance and cannot be used to predict future returns. The target return set for a fund may not be achieved. The risks are set out in more detail in each fund’s key information document and in the fund prospectus. Before making an investment decision, investors should consult the fund’s key investor information document, fund prospectus, rules and price list, which are available on each fund’s website. The funds are managed by UB Fund Management Company Ltd. The portfolio management of the funds has been outsourced to UB Asset Management Ltd.